USDA loans are truly one of the best loans available for First Time Home Buyers. You do not have to have any down payment at all. There is an upfront mortgage insurance that can be rolled into the loan and there is monthly mortgage insurance. The premiums on the monthly mortgage insurance are very affordable. It is the cheapest mortgage insurance for the the highest loan to value. The interest rates traditionally are excellent. Most USDA loans that we close, the buyer pays little or no money at the closing of the loan. In some cases they get a portion or all or their earnest money back.
There are restrictions on this loan. You can not own any other property, there are geographic restrictions, and income restrictions. USDA Loans are also known as Rural Development loans.
Here is an example of a USDA loan:
Sales Price is $200,000
Loan amount $204,000 (The extra $4,000 is the Upfront Mortgage Insurance that can be rolled into the loan.
Interest Rate of 3.25% APR 3.892%
30 Year fixed loan
Principal and Interest Payment of $888.17
Mortgage Insurance Monthly $67.41 (.40 mortgage insurance factor)
For Oregon homes property tax and insurance would be around $205.00
Total house payment $1,160.58
In most cases we have the seller pay the closing costs or get the lender to credit the borrower for closing costs. Or a combination there of. This allows the borrower to bring very little or nothing at closing and in most cases they can get back part or all of their earnest money back.